Icahn's Open Letter to Dell Holders Shows He Will Not Pursue Added Efforts to Defeat Dell Offer

Today Carl Icahnreleased the following open letter to Dell Inc. (NASDAQ: DELL) stockholders.Dear Fellow Dell Inc. Stockholders:I continue to believe that the price being paid by MichaelDell/Silver Lake to purchase our company greatly undervalues it,among other things, because:1. Dell is paying a price approximately 70% below its ten-yearhigh of $42.38; and2. The bid freezes stockholders out of any possibility ofrealizing Dell's great potential.Although the board accepted Michael Dell/Silver Lake's offer inFebruary, it promised stockholders that the Company would hold ameeting at which stockholders could make the final decision aswhether or not to accept the transaction. The board recommendedthat stockholders vote in favor of the proposed transactionbecause it was Michael Dell/Silver Lake's “best and finaloffer”. Icahn and Southeastern argued that stockholders shouldnot give up the huge potential of Dell and therefore shouldreject the proposed transaction. We won, or at least thought wewon, but when the board realized that they lost the vote, theysimply ignored the outcome. Even in a dictatorship when theruling party loses an election, and then ignores its outcome, itattempts to provide a plausible reason to justify their actions.Andrew Bary at Barron's wisely observed, “In an action worthy ofVladimir Putin, Dell postponed a vote scheduled for lastThursday on Michael Dell's proposed buyout of the company whenit became apparent that there was insufficient shareholdersupport for the deal.” But the Dell board felt they needed noexcuse when they changed the voting standard and changed therecord date of those eligible to vote, which allowedarbitrageurs to vote a much greater percentage of the stock whenthe polls reopen and scheduled the annual meeting for October.The board simply relied on the usual “business judgment”catchall and Delaware law to uphold their actions. We jokinglyask, “What's the difference between Dell and a dictatorship?”The answer: Most functioning dictatorships only need to postponethe vote once to win.As a result of 1) the change in the record date allowing newstockholders to vote on the proposed Michael Dell/Silver Laketransaction on September 12th, 2) Chancellor Strine's rulingthat a gap period between the September 12th meeting and theannual meeting was legal under Delaware law and 3) the raise inthe bid by Michael Dell/Silver Lake, we have determined that itwould be almost impossible to win the battle on September 12th.We have therefore come to the conclusion that we will not pursueadditional efforts to defeat the Michael Dell/Silver Lakeproposal, although we still oppose it and will move to seekappraisal rights.I realize that some stockholders will be disappointed that we donot fight on. However, over the last decade, mainly through“activism” we have enhanced stockholder value in many companiesby billions of dollars. We did not accomplish this by wagingbattles that we thought we would lose. Michael Dell/Silver Lakewaged a hard fought battle and according to Chancellor Strine,the actions by Dell were within the Delaware law. We thereforecongratulate Michael Dell and I intend to call him to wish himgood luck (he may need it).While we of course are saddened at our losing the battle tocontrol Dell, it certainly makes the loss a lot more tolerablein that as a result of our involvement, Michael Dell/Silver Lakeincreased what they said was their “best and final offer”. As aresult of this increase all stockholders are to receive manyhundreds of millions of dollars more than the board originallyaccepted. We will never know how much more stockholders mighthave received if the board had allowed the annual meeting toproceed at the same time as the rescheduled special meetingwhich we believe would have put pressure on Michael Dell/SilverLake to increase their bid.One of the great strengths of our country is that we abide bythe rule of law. However, state laws dealing with corporategovernance often favor incumbent corporate boards and managementand are weak in many areas. While we must abide by these laws,we believe that they can and must be changed. Among many otherthings, boards should not be able to treat elections astotalitarian dictatorships do; where if they lose, they simplyignore the results.The Dell board, like so many boards in this country, reminds meof Clark Gable's last words in “Gone with the Wind,” they simply“don't give a damn.” If you are incensed by the actions of theDell Board as much as I am, I hope you will choose to follow meon Twitter where from time to time I give my investmentinsights. I also intend to point out what I consider to beunconscionable actions by boards and discuss what remediesshareholders may take to change the situation.I wish to take this opportunity to thank all Dell shareholderswho supported Southeastern and Icahn.Very truly yours,Carl Icahn